Change is paying off at Restoration Hardware Holdings. The company announced sales and revenue gains for the third quarter of fiscal year 2012 ended October 27 as it prepares to launch new operations including Restoration Hardware Tableware.
For the third quarter, net income was $1.7 million versus a loss of $4.83 million in the period a year ago on a GAAP basis. Adjusted net income was $2.7 million up 147% from the third quarter of fiscal 2011, the company related. Adjusted diluted earnings per share was 7 cents for 2012, with shares used to calculate the EPS figure reflecting Restoration Hardware’s post-initial public offering capital structure, the company stated. The adjusted diluted earnings per share figure in last year’s third quarter was 37 cents.
In the quarter, net revenue increased to $284.2 million from $232.5 million in the period a year earlier while comparable store sales grew 29%, the company reported. Direct sales jumped 24% in the quarter, the company added.
The 7 cents diluted EPS posted beat a published Thomson Reuters average analyst estimate of 4 cents.
Operating income came in at $2 million versus a loss of $4.1 million in the 2011 quarter.
Carlos Alberini, Restoration Hardware CEO, said, “We are very pleased with our third quarter financial results, as we delivered a 22% revenue increase on top of the 25% increase a year ago. This performance, which is consistent with the 22% growth achieved for the year-to-date period, marks our 11th consecutive quarter of double-digit revenue growth. During the period, we also drove significant earnings growth, contributing to a 95% increase in adjusted net income year-to-date. As we look forward, we remain focused on the execution of our growth initiatives, including the transformation of our real estate and the expansion of our offering.”
Alberini noted that the retailer is in “the very early stages of transforming our legacy mall real estate into our new full line Design Gallery concept. Our Los Angeles and Houston full line Design Galleries continue to perform ahead of our expectations. After delivering great market growth during the first year, these Galleries continue to deliver double-digit comp growth. Further, our new full-line Design Gallery in Scottsdale has also delivered market growth ahead of plan since its November opening. We plan to open new full-line Design Galleries in Boston, Indianapolis, Greenwich and Atlanta, and are actively pursuing locations in several other key markets,” continued Alberini.
Gary Friedman, chairman emeritus, creator and curator, commented, “We believe our brand is redefining the luxury home furnishings market and our proven ability to innovate, curate, and integrate new product categories and businesses will position us to continue our industry-leading growth. Our new and developing businesses, RH Baby & Child, and RH Big Style/small spaces are gaining momentum as we refine the assortments and presentation. We opened our third and largest Baby & Child Gallery in Santa Monica, CA, last month, and the initial results are very encouraging. We continue to believe this concept can have a retail presence in at least the top 50 markets. We also plan to test a retail footprint of Big Style/small spaces in our next generation full line Design Gallery opening in Atlanta in 2014.”
Friedman noted that new businesses are preparing to roll from Restoration Hardware’s development lab.
“We are introducing three new businesses this Spring: RH Tableware, RH Objects of Curiosity and RH Fine Art. RH Tableware and RH Objects of Curiosity will feature their own catalogs, with planned in-home dates in the first quarter of 2013. Many of the products from these new businesses will also be presented in our current galleries and create an opportunity to drive higher productivity in our existing retail square footage. RH Fine Art will launch with an innovative Art Journal, a dynamic new website and a dramatic art gallery in New York in the first half of 2013. We believe this new venture into the world of fine art will render the RH brand more valuable and reinforce our luxury lifestyle positioning,” said Friedman.